The discovery of oil in commercial quantities was welcomed with joy and hope for a better future in 2007.

There were numerous workshops to make sure Ghana could learn from other’s mistakes and build a prosperous nation for the future generation.

The Norwegian model was hailed as the exemplary way to go and avoid the Dutch disease. A decade on from first oil, what will we say has been accomplished?

After the first oil discovery in the Mahogany-1 well in the West Cape Three Points, there were 23 discoveries (odum, Ebony, Tweneboa, Sankofa, dzata, owo, Teak-1, Paradise-1, Banda-1, Gye Nyame, and others) that were subsequently made. What becomes known as Jubilee field was the development of the Mahogany and hyedua discoveries.

We have since then made more discoveries and developed them into the TEN field (Tweneboa_Enyenra-Ntomme ). Currently, Ghana produces oil from the Jubilee field and TEN (Tullow oil) as well as the oCTP field operated by ENI. We are currently producing an average of 145,000 barrels per day from these three fields.

The production of oil gave the country the needed revenue for socio-economic development. It also helped us achieve fuel security to produce electricity since before these discoveries we were heavily dependent on Nigeria for Gas through the West African Gas pipeline.

Missed Outcomes

The pomp and pageantry that greeted our oil production was short-lived since the ordinary Ghanaian was not seeing any transformation in their daily lives.

The depreciation of the Cedi has continued year on year though we have become an oil producing country, with billions of dollars being spent in our oil industry. Fuel cost has risen yearly because we do not have the capacity to refine our own crude oil.

 

The much talked about petrochemical industry has not materialised mainly because we opted for FPSo based production as compared to building crude oil storage facilities onshore.

The building of subsea pipelines to bring the crude oil to a storage facility will have also helped us monitor the flow meters used in discharging the crude oil for export.

 

Petroleum Commission was set up in 2011 with the Parliamentary Act 821 to regulate the upstream companies and their activities. For Ghanaian companies to have the full benefits of our oil industry, the local content law must be strictly adhered to.

Local Content

Till date, Ghanaian workers in the oil upstream sector are complaining about salary disparity with their expatriate colleagues.

Some oil companies are finding loopholes in the law to employ foreign workers for jobs that a Ghanaian can do. Financial capacity has also been a challenge for contracts reserved for local companies.

There was potential for mid_stream business development to add to Ghana’s revenue. The

associated gas from these field have huge potential to transform our economy as we have witnessed in Qatar.

After the construction of Ghana Gas, no other development has been made to take advantage of all the gas being produced. We are flaring an average of 1,851 MMscf (Million Standard cubic feet) of Gas and 8,613 MMscf is re-injected onto the wells every month.

The exploration activities offshore Ghana has been very few in recent years. There are 15 companies currently holding petroleum agreements to undertake various exploration and product work programmes.

The active companies are Tullow and partners, ENI, ExxonMobil, Springfield, Aker Energy. Aker Energy suspended their exploration programme in 2020 because of CovId-19 and we do not have news of when they intend to resume.

Most of the companies which signed their petroleum agreements in 2013 and 2014 have done little or no work. Some of these companies are using Covid-19 as a reason for their inactivity, which is very odd because the first phase of their exploration period is for 30 months (two and half years).

According to their Petroleum Agreements, their first phase work programme should have been completed in mid-year 2016. Springfield oil in 2019 drilled the Afina-1x well and made a sizable discovery. This was the first time a Ghanaian Indigenous company had ventured into the risky business of exploration and succeeded.

This discovery by the company led to a unitisation talk with ENI in 2020. This process is still ongoing since ENI is asking for more technical information before engaging in the unitisation negotiation.

The rate of our upstream development is very alarming and if this is not improved, Ghana could go through a period of no oil revenue in the near future.

Countries such as United Arab Emirates suffered similar fate when their oil reserves dried up and did not embark on new exploration activities.

The petroleum law was changed in 2016 from the old PNdC L84 to petroleum Act 919. The new law is to enable Ghana to derive better benefits through improved fiscal policies and the introduction of competitive tender for oil blocks as opposed to the direct negotiation.

For Ghana, the limited amount of data and the quality of this data may not help us get the maximum benefits from competitive tender.

This scenario played out in the first competitive tender organised by the Government in october 2018.

Six blocks were made available for the competitive tendering

process.

Three blocks were to be awarded through an open and competitive bidding process, two through direct negotiations and one to be solely operated by the Ghana National Petroleum Corporation (GNPC).

Sixty applications were received from 16 companies. Fourteen pre-qualified companies were invited to make formal bid submissions to the government but only three companies submitted bids for two of the blocks available for competitive

bidding: Tullow Ghana and Eni Ghana Exploration and Production Limited submitted bids for Block3, whereas First Exploration and Petroleum Development CompanySubmitted bids for Block2.

The government started negotiations with the winning companies on July 3, 2019 and these were expected to be completed on August 30, 2019 as per the government’s official timeline. This delay has also contributed to the low exploration activity in Ghana’s upstream.

Investor’s confidence in Ghana’s oil market has not improved because of over politicisation of every decision.

Ghana has a lot to learn a decade after first oil. We have made avoidable mistakes but if we acknowledge and make amends, the next 10 years can bring the needed prosperity that will affect the life of the ordinary Ghanaian.

The writer is the Executive Director of Institute for Energy Policy and Research

Source: https://www.graphic.com.gh/?view=article&id=154343:over-decade-after-first-oil-maximising-the-benefits&catid=257